3 - 5 minute read
Bitcoin NFTs, also known as Ordinals, have become a topic of interest in the crypto ecosystem. These Ordinals have been introduced on the Bitcoin blockchain and are similar to NFTs. According to Grayscale, a cryptocurrency investment firm, Ordinals could renew developer enthusiasm for Bitcoin and boost mining fees. In an April 27 blog post, Grayscale suggested that Ordinals provide two key benefits to the growth and development of the Bitcoin ecosystem.
The first benefit is a substantial increase in fees paid to miners, which has been seen since the launch of the protocol in January. Grayscale argued that this would ensure “continued network security throughout the lifetime of the Bitcoin network.” As reported by Cointelegraph, in less than two months after its launch, more than $600,000 was paid to Bitcoin miners, solely as the result of fees generated by Ordinal inscriptions. As of the time of publication, that figure now exceeds the $6.5 million mark.
The second benefit of Ordinals and the “velocity of NFT adoption” could attract new Bitcoin users and spark more development on the Bitcoin network. “We believe the emergence of ordinals is likely to promote a development-oriented community and culture in support of the Bitcoin network,” said Grayscale in their blog post.
“The advent of ordinals has led to an increase in total fees paid to miners […] which could potentially establish a sustainable baseline level of transaction fees to incentivize miners.”
On April 30, Ordinals reached a new record, with the number of daily inscriptions topping 300,000. Around the same time, the number of Bitcoin transactions neared peaks not seen in a number of years, according to blockchain data firm IntoTheBlock.
However, the meteoric rise of Ordinals has been a controversial topic in the wider Bitcoin community, having been extensively criticized by Bitcoin maximalists for straying from the original purpose of Bitcoin as a peer-to-peer electronic currency and clogging up valuable block space. Blockstream CEO Adam Back is one such critic who has made a number of comments in which he declared Ordinals to be “useless” and claimed that he is “more into Bitcoin as a currency.”
#Ordinals have generated a great deal of attention in the crypto ecosystem by introducing #NFT-like assets on the #Bitcoin blockchain. @mzhao8 and our research team explore their potential in our latest Market Byte:
— Grayscale (@Grayscale) April 28, 2023
https://t.co/7muc9Lyrok
Ordinals have become a topic of interest in the crypto ecosystem, with the potential to renew developer enthusiasm for Bitcoin and boost mining fees. However, their controversial nature has led to criticism from some in the Bitcoin community. Traders should keep an eye on the developments surrounding Ordinals and monitor the impact it may have on the Bitcoin market.
The Bottom Line
The emergence of Ordinals could potentially establish a sustainable baseline level of transaction fees to incentivize miners, increase network security and attract new Bitcoin users. However, the controversial nature of Ordinals has led to criticism from some in the Bitcoin community. Traders should monitor the impact Ordinals may have on the Bitcoin market.
